Analysts had expected Legg to report a profit of 3 cents per share, according to Bloomberg, which noted that this was the company's first quarterly loss since early 2009.

Legg's stock closed Friday down 27 cents to $24.86 per share.

"Don't judge a book by its cover. This has been a quarter of real progress," said Legg Chairman and CEO Mark R. Fetting.

Most of the loss was attributed to the cost of refinancing debt, which led to a noncash charge of $69 million, or 32 cents per share. Legg retired $1.25 billion in debt early, issued $650 million in new debt and took out a bank loan — moves that reduced the company's debt obligations by $350 million.

Legg also introduced two new funds, the ClearBridge Equity MLP Total Return and the Western Asset Mortgage Capital Corp. The total cost to launch the funds was $22.7 million, or 11 cents per share. The new funds attracted a combined $1 billion in assets in the quarter.

Overall, investors pulled $2.6 billion out of Legg funds in the quarter — the lowest in years — and Fetting said Legg was closer to a turnaround with consistent inflows. Investors in the quarter pulled $3.9 billion out of stock funds, while adding $1.2 billion to money market funds and $100 million to bond funds.

"This was our best flow story in five years," Fetting said.

Jeffrey J. Hopson, an analyst with Stifel, Nicolaus & Company Inc., said the quarter was "a little mixed." Stifel owns shares in Legg and has provided the company with securities-related services.

After factoring out the costs of refinancing and fund launches, Hopson said, "Overall, the financial results were a little under expectations."

"Fixed income is looking a little better," Hopson said. "But again, because of the markets and their equity outflow, they have seen financial pressure on the overall financial results."

Assets under management fell to $631.8 billion, down $11.5 billion from the end of March and $30.7 billion from a year ago. Market losses of $4.3 billion in the quarter contributed to the decrease.